How To Open a Gym in Nine Steps

One of your first decisions should be to start from scratch with an independent gym or franchise an existing brand.

Both options have their advantages and challenges. The choice depends on your preferences, business goals, and resources. While opening an independent gym allows you more freedom and flexibility, it also comes with less support and steeper startup costs. You will also have to work harder to market your gym since you won't have built-in brand recognition.

Conversely, franchising a gym offers more support and less startup costs but limits your creativity. Some well-known gym and fitness center franchises include:

• Orangetheory Fitness (OTF)
• Anytime Fitness
• Pure Barre
• Snap Fitness

CrossFit's fitness brand doesn't franchise but offers an affiliate program for prospective gym owners.

Develop Your Business Goals

The goals you set for your gym should guide your efforts for where you want to take your business and how you determine success. Review and adjust your goals as your business grows and the market evolves. Considering the factors below can help you make realistic, specific goals:

• What amount of earnings do you expect for the first year?
• Do you plan to hire staff?
• Are you interested in renting out some of your space?
• Do you plan to provide your members wellness services like red light therapy and massages?
• What is your membership target for opening day and after one year?

These considerations can lead you to make different decisions as you take your first step in opening a gym. These steps include:

• Creating a business plan
• Choosing a name for your fitness business
• Choosing a legal structure for your business
• Getting an EIN (employer identification number)
• Getting business licenses and permits
• Setting up a marketing strategy
• Getting a business bank account and insurance
• Hiring staff

Make a Business Plan

It helps to jot your ideas down as you figure out how to open and sustain your business. As your ideas take shape, you can create a formal business plan.

A business plan is an essential tool for many reasons. It helps you put together a financial strategy for your business. It can also come in handy when you approach others to discuss your goals.

For example, if you need to approach investors about funding, you need a business plan they can review. Many new business owners need loans or other sources of financing, and a business plan can help others understand your business model and potential for success.

Your business plan should cover the following topics:

• Name of your business
• Costs of gym equipment and supplies
• Pricing for gym memberships and services
• Location for your fitness center
• Operating costs
• Legal structure of your business entity
• Names of other owners (if any)
• Market research (target market and demographics)

Do Market Research

Your market research should inform the type of fitness business you open. Thorough research will help you identify market trends and the demand for a particular type of fitness business in your area. Find your niche and effectively meet the needs of your target audience. Consider the following questions:

• Could your area support a boutique-style fitness studio, like spin, yoga, or Pilates?
• Will you offer personal training sessions, group classes, or just the basics like cardio equipment and free weights?
• How much is your target market willing and able to spend on a gym membership?
• Will your business function as a basic gym or more like a health club?
• Will your gym serve a particular demographic, like women or seniors?

Consider Startup Costs

It is crucial to include an estimate of startup costs. Startup costs could consist of:

• Buying used or new fitness equipment
• Advertising and marketing
• Forming the type of business structure you choose
• Future maintenance or repairs
• Renting or buying a space
• Insurance policies

Consider extra safety and maintenance costs if you start with treadmills, weights, or other types of gym equipment. Ensure any used equipment is in good condition before buying.

You'll likely need to take out a business loan or secure other financing to cover these costs. Check with the Small Business Administration (SBA) or your local Small Business Development Center to see if you qualify for any small business loans or grants.

Picking a name for your business is fun but can also be tricky. There are several things to consider when choosing a business name:

• Is the name unique and well-suited to your industry?
• Will your target customer base find the name appealing?
• Is the name you want already in use by another company?

Conduct a name search to address the question of business name availability. You should also check state business records to determine if another business in your state already uses the name.

You can also check the fictitious name database to see if any DBA names match the name you want to use. Finally, check out the trademark database. This is vital because you do not want to choose a trademarked name. You can face legal penalties if you attempt to use a name someone else has already trademarked.

You may want to use a fictitious business name for your gym. A fictitious name (or trade name) is a name other than the legal business name you can use for business activities. If you want to use an assumed name, you must go through registering a DBA name.

Consider three common types of legal structures for your gym:

• Sole proprietorship
• Limited liability company (LLC)
• Corporation

There are some key differences between these legal structures.

A sole proprietorship is the least complicated business structure to form. It is also the cheapest to get off the ground.

To create an LLC or corporation, you must file paperwork with the Secretary of State or equivalent agency. A sole proprietor doesn't have to file paperwork with the state or pay the filing fee. So, why would one choose to have an LLC or corporation?

Sole proprietors do not have liability protection. Owners of an LLC or corporation have limited liability, which protects their assets if someone sues the business.

There are also tax implications to choosing a legal structure for your business. Business owners' tax treatment depends partly on their legal entity type and selected tax status.

Get an Employer Identification Number (EIN)

The Internal Revenue Service (IRS) gives employer identification numbers (EINs) to businesses to identify them for tax purposes. In most cases, business owners must have an EIN.

Getting an EIN is simple. Applying online is the quickest way. You can complete the application on the IRS website and get your EIN. Never pay any online service to secure your EIN; the IRS issues them for free.

Open a Business Bank Account

It helps to have a separate account for your business and personal funds, no matter which type of business structure you choose. Keeping your business and personal funds separate is important if you form an LLC or corporation.

Limited liability is a benefit of an LLC or corporation. But, if you do not separate your business and personal funds, your assets could be at risk in a lawsuit.

Consider opening a business bank account and getting a credit card for your business expenses. Avoid commingling of funds as your business grows.

Find a Location 

Finding the right location for your gym is crucial. You'll need to factor in several variables, including:

• How much of your budget you can spend on commercial leasing
• Proximity to your target market
• Future plans and scalability
• Zoning ordinances and land use regulations

Your gym may also need a particular space layout. Ensure your commercial space is large enough (between 850 and 8,000 square feet, depending on your type of gym) and has the proper infrastructure.

Secure Licenses and Permits

Local authorities require that business owners secure the proper business licenses and permits to do business in the area. Attempting to do business without the necessary licenses or permits could result in fines or other penalties.

You can also protect yourself by getting business insurance. If someone suffers a loss in or on your property, you want coverage from an insurance policy. Also, consider having waivers or putting a clause in your membership agreements to protect you if a member gets injured at your gym.

As a new business owner, knowing your target market and how to reach this customer base is essential. Word of mouth goes a long way, but you should also develop a creative marketing strategy.

There are several ways you can advertise your business:

• Advertising in newspapers and regional publications
• Traditional radio ads or podcast sponsorships
• Signage
• Building a website and other digital strategies
• Attending community events and local partnerships
• Contacting local news outlets about your new business, generating publicity and press coverage

Making room for merchandise and other promotional items in your budget may also attract new members.

Don't forget about social media. Use Instagram, TikTok, and other platforms to market your brand and show potential customers how you can help them reach their health and fitness goals. Connect with fitness influencers (or "fitfluencers") to discuss your brand on their channels. For example, you could offer a free month of membership in exchange for a recommendation for your gym.

The fitness industry is competitive and should think about retention rates early. Although you're focused on attracting new gym members now, you'll need a strong retention strategy to keep them.

You may need to hire employees to help you keep your business running.

You may want personal trainers who work one-on-one with members. Your business may also offer classes led by group fitness instructors. If you do this, hire fitness professionals with the proper industry-recognized certifications.

Depending on the needs of your business, you may also need front desk staff and custodians.

You will likely need worker's compensation insurance if you have employees. This type of insurance may kick in if an employee suffers a work-related injury.